Wells Fargo is generating class-action lawsuits and the financial penalties of regulators for creating some 2 million credit card and deposit accounts on behalf of customers who did not authorize them.
One question that remains unanswered has to do with the impact of these fake accounts on the affected customers’ credit scores.
Every new credit card account an individual opens is recorded by the three major credit reporting agencies. Even if nothing is charged, a card may carry an annual fee that can go unpaid. That can result in a late payment, which is a blemish that can reduce one’s credit score.
Ira Rheingold, executive director of the National Association of Consumer Advocates, told NPR.org that late fees or fines for insufficient funds in the fake accounts could have an impact on someone’s credit score. “You may not have qualified for a mortgage or you might have been dinged by getting charged a little higher interest rate because of what was reported wrongly on your credit report,” he says.
At a Senate Banking Committee hearing last week, Democrat Jon Tester of Montana warned Wells Fargo CEO John Stumpf about this very issue regarding credit reports of affected customers.
“I am telling you that if information was sent into the credit bureaus because of these falsely opened accounts, the impacts on this are far far far more than the fees or fines that could be associated with that,” Tester said.
Wells Fargo says it is contacting customers to find out whether they wanted the accounts opened in their names.